Henry Schein (HSIC) reported an EPS of 82 cents in the first quarter of fiscal 2011, surpassing the Zacks Consensus Estimate of 80 cents. The EPS was also 9.3% higher than the year-ago period’s adjusted EPS of 75 cents.
Henry Schein reported a 10.6% rise in net sales to reach $1.9 billion, consisting of a 9.9% growth in local currency and 0.7% growth associated with foreign currency. Revenues beat the Zacks Consensus Estimate of $1.86 billion.
Henry Schein derives revenues from dental, medical, animal health, international and, technology and value added services. These divisions accounted for 34% ($662.8 million), 16% ($319.8 million), 12% ($230.6 million), 35% ($690.0 million) and 3% ($55.6 million), respectively, of total revenue during the quarter.
The largest segment at Henry Schein, North American Dental, recorded a 7.8% increase in sales driven by 7.2% growth in local currencies coupled with 0.6% growth in foreign exchange. During the quarter, the dental consumable merchandise sales increased by 8.9% in local currencies.
Moreover, the dental equipments sales increased by 1.3% year over year in local currencies. However, excluding the revenues from Biolace products, Henry Schein’s dental equipment sales growth was 2.4% in local currencies.
The 12.4% growth in medical sales to some extent was reflecting the success in clinical diagnostic products and pharmaceuticals. Lately the company acquired Alpha Scientific which is expected to strengthen the position of the company in physician and medical laboratory market of California.
The company’s animal health segment witnessed an 11.6% increase in revenues during the quarter. Out of this, internally generated sales increased 7.5% and acquisition growth was 4.1% year over year.
Revenues derived from the international market witnessed a significant 11.4% increase from the year-ago period consisting of a 9.8% growth in local currency, primarily due to the acquisition of Provet Holdings and a 1.6% increase foreign currency exchange.
We note that Henry Schein has witnessed a 1.4% growth in its international dental sales which represented 64% of its International business during the quarter especially dental equipments.
Although there was sound revenue growth across all its segments, gross margin declined 9 basis points to 29.05% due to a 10.7% rise in cost of sales. Moreover, an 11.2% growth in selling, general and administrative expenses led to a drag in operating margin (21 basis points to 6.4%).
Henry Schein exited the quarter with cash and cash equivalents of $116.7 million, compared to $150.3 million at the end of December 2010. During the reported quarter, the company repurchased 409,755 shares at $66.13 per share and was left with $92.9 of authorization.
Henry Schein reaffirmed its guidance for fiscal 2011. It expects EPS of $3.88−$3.98, reflecting an annualized growth of 8%−11%.
Be the first to comment